Arbitration – Wage & Hour Law Updatehttps://www.wageandhourlawupdate.com
Tue, 12 Mar 2019 16:53:45 +0000en-UShourly1https://wordpress.org/?v=4.9.10Just as with the NLRA, the FLSA Does Not Preclude Collective Action Waivers in Arbitration Agreements, Sixth Circuit Holdshttps://www.wageandhourlawupdate.com/2018/08/articles/wage-and-hour/just-as-with-the-nlra-the-flsa-does-not-preclude-collective-action-waivers-in-arbitration-agreements-sixth-circuit-holds/
https://www.wageandhourlawupdate.com/2018/08/articles/wage-and-hour/just-as-with-the-nlra-the-flsa-does-not-preclude-collective-action-waivers-in-arbitration-agreements-sixth-circuit-holds/#respondWed, 29 Aug 2018 14:42:35 +0000https://www.wageandhourlawupdate.com/?p=2738Continue Reading]]>In a natural extension of the Supreme Court’s recent conclusion that the NLRA does not preclude the use of class or collective action waivers in employment-related arbitration agreements, the Sixth Circuit Court of Appeals has confirmed that such waivers are likewise permitted under the FLSA. Gaffers v. Kelly Services, 2018 U.S. App. LEXIS 22613 (6th Cir. Aug. 15, 2018). In so holding, the Sixth Circuit followed the lead of the Supreme Court’s decision in Epic Systems Corporation v. Lewis, 138 S. Ct. 1612 (2018). The Sixth Circuit has jurisdiction over Kentucky, Michigan, Ohio, and Tennessee.

The plaintiff, a former Kelly Services employee, brought suit under the FLSA on behalf of himself and his co-workers, alleging that the Company failed to properly pay him for all time worked. Because about fifty percent of the putative class (collective action) members the plaintiff seeks to represent signed arbitration agreements, the Company moved to compel arbitration. Denying the motion, the district court concluded that the NLRA and the FLSA rendered the agreements unenforceable and denied the motion.

On appeal, the Sixth Circuit easily dispensed with the lower court’s determination regarding the NLRA, in light of the Supreme Court’s interim decision in Epic Systems that the NLRA does not in fact preclude enforcement of class or collective actions waivers in employment-based arbitration agreements. Moving on, the Court of Appeals first noted that the plaintiff “faces a stout uphill climb” in his contention that the Arbitration Act and the FLSA’s collective action provision cannot be reconciled. Noting the Supreme Court’s direction in Epic Systems, “that a federal statute does not displace the Arbitration Act unless it includes a ‘clear and manifest’ congressional intent to make individual arbitration agreements unenforceable,” and that the right to engage in collective action alone does not satisfy this standard, the Sixth Circuit concluded that the FLSA contained no express language precluding the use of arbitration. On the contrary, the FLSA’s collective action provision “gives employees the option to bring their claims together [but] . . . does not require employees to vindicate their rights in a collective action.” Thus, “employees who do not sign individual arbitration agreements are free to sue collectively, and those who do sign individual arbitration agreements are not.” Notably, the Court of Appeals added, long ago the Supreme Court held that the Age Discrimination in Employment Act (ADEA), which contains exactly the same collective action language as (and is patterned on) the FLSA, does not displace the Arbitration Act, and thus there is no reason that such a provision should not be equally enforceable under the latter Act.

Finally, the Sixth Circuit rejected the plaintiff’s argument that the collective action waiver should be deemed unenforceable for public policy reasons, noting that such a basis would be the province of Congress, not the courts, as well as the plaintiff’s argument that the Arbitration Act’s “savings clause” should preclude enforceability of the waiver provision. As the Supreme Court made clear in Epic Systems, the savings clause – which allows courts to refuse to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract” (e.g. fraud or duress) – cannot be used when the defense applies only to arbitration agreements, as opposed to all contracts in general, or when the defense would “interfere with the ‘fundamental attributes of arbitration,’” including the common attribute of individualized proceedings.

For more information about collective/class action waivers (in the wage-and-hour context or otherwise), please contact the Jackson Lewis attorney(s) with whom you regularly work.

]]>https://www.wageandhourlawupdate.com/2018/08/articles/wage-and-hour/just-as-with-the-nlra-the-flsa-does-not-preclude-collective-action-waivers-in-arbitration-agreements-sixth-circuit-holds/feed/0Florida Federal Court Provides Path for Employer Recovery of Attorney’s Fees in FLSA Caseshttps://www.wageandhourlawupdate.com/2018/04/articles/wage-and-hour/florida-federal-court-provides-path-for-employer-recovery-of-attorneys-fees-in-flsa-cases/
https://www.wageandhourlawupdate.com/2018/04/articles/wage-and-hour/florida-federal-court-provides-path-for-employer-recovery-of-attorneys-fees-in-flsa-cases/#respondWed, 25 Apr 2018 22:47:24 +0000https://www.wageandhourlawupdate.com/?p=2719Continue Reading]]>In most lawsuits filed under the Fair Labor Standards Act (FLSA), an employer’s ability to recover any attorney’s fees under the prevailing standard – that a plaintiff filed the case in “bad faith, vexatiously or wantonly” – is much too difficult to satisfy. A recent decision from the U.S. District Court for the Middle District of Florida, however, provides an avenue for recovery of such fees – at least in part. Aralar v. Scott-McRae Automotive Group, LLLP, 2018 U.S. Dist. LEXIS 64045 (M.D. Fla. Apr. 17, 2018).

In Aralar, the plaintiff filed suit in federal court, claiming that his employer had improperly classified his automotive service advisor job as exempt and that as a result he was entitled to overtime pay and other damages under the FLSA. However, as a condition of his employment the plaintiff had signed an arbitration agreement, one provision of which was the following:

If a party who has agreed to arbitrate claims under this procedure files or causes to be filed in court or state agency a complaint alleging a claim or causeof action which is subject to arbitration under this procedure, the defendant/respondent will notify the party or the party’s attorney of the existence of the Arbitration Agreement, and request that the case be dismissed or stayed. If the party does not move todismiss or stay the action within 10 calendar days of service, and the defendant/respondent successfully moves to dismiss or stay the case andrefer it to arbitration, the defendant/respondent may submit a request for payment of fees and costs to the Arbitrator, who shall award to the defendant/respondent and against the party the defendant/respondent’s reasonable costs and attorneys [sic] fees incurred because of the filing of the complaint.

After the plaintiff filed his judicial complaint, the employer gave notice of the arbitration agreement under this provision, yet the plaintiff took no action to stay or dismiss his lawsuit. The district court subsequently stayed the case pending arbitration and ultimately the arbitrator dismissed the plaintiff’s claims, finding that his job was properly classified as exempt (a decision that pre-dates, yet conforms with, the Supreme Court’s recent ruling on the exempt status of automotive service advisors, discussed here). The employer then sought, and the arbitrator awarded, attorney’s fees and costs of nearly $20,000 stemming from the plaintiff’s failure or refusal to dismiss his lawsuit, as provided for in the above provision. The employer moved the district court to confirm the attorney’s fees award, while the plaintiff moved to have the award vacated. Citing Fox v. Vice, 563 U.S. 826 (2011) and Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978), the plaintiff claimed that because his claims were not frivolous, there was a per se rule against awarding fees to the employer. The district court disagreed, noting that these cases addressed the awarding of fees in Title VII and other civil rights cases, not FLSA cases. The court rejected the plaintiff’s additional arguments for vacating the award, noting that none of them addressed the only available grounds currently existing to do so: procurement through corruption, fraud or undue influence by a party; partiality or corruption by the arbitrator; an arbitrator’s refusal to hear evidence or other misconduct; or where the arbitrator exceeded his or her powers.

In short, concluded the court, the parties signed a contract and the plaintiff did not honor it. As a result, the district court had very limited grounds to disturb the arbitration award and found no such grounds in this case. For an area of law in which any attorney’s fees are nearly impossible to collect for defendant employers, this case provides useful guidance for employers who have implemented, or are considering implementing, arbitration programs. From a practical perspective, prevailing employers likely will not be able to collect all of their fees against plaintiffs in FLSA cases but, at a minimum, use of a provision such as the one in this case, albeit limited in the extent of fees and costs potentially recoverable, may provide significant leverage for negotiation and ultimate resolution of FLSA claims.

If you have any questions about enforcement of arbitration agreements in FLSA cases or any other wage and hour question, please consult the Jackson Lewis attorney(s) with whom you regularly work.